June 23, 2022 - HR News Alerts

Key Judicial Decisions Affect California Wage Payment Claims

The WinCo And Viking Decisions Set Limits On Wage Payment Claims In California

Two federal courts—the U.S. Supreme Court and the 9th Circuit Court of Appeals—recently ruled on cases involving wage claims by employees. These decisions set limits on wage claims in California. Judicial decisions are effective on the day they are issued and control legal interpretation until they are overruled by a higher court or overridden by new legislation. 

Preemployment Drug Tests

On June 13, 2022, the 9th Circuit Court of Appeals held in Johnson v. WinCo Foods, LLC (WinCo) that job applicants are not entitled to compensation for time spent undergoing drug testing as part of their job application process. The WinCo decision was issued on the ground that, under California law, this job applicant was not yet an employee when drug testing took place.

The WinCo decision highlights the importance of the employment relationship between parties in a wage payment claim. It is also a reminder that wage payments should comply with state law once individuals are considered to be employed.

Arbitration of PAGA Claims

In Viking River Cruises, Inc. v. Moriana (Viking), the U.S. Supreme Court held that individual California Private Attorneys General Act (PAGA) claims can be subject to arbitration agreements between employers and employees under the Federal Arbitration Act (FAA).

However, the Viking decision involved a situation where a signed class action waiver existed between Viking and Moriana. The waiver stipulated that the parties could not bring any class, collective or representative PAGA actions in arbitration but required individual claims to be enforced.

The Viking decision has created some uncertainty on the relationship between PAGA claims, FAA arbitration agreements and the categorization of claims as individual or “non-individual.” Employers should continue to monitor legislative and judicial guidance to ensure compliance with both PAGA and the FAA

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